Japanese auto majors may post encouraging quarterly results

By Money Times

Nov 03, 2015 08:12 PM EST

The second quarter for Japanese automobile majors is expected to be positive as the sales surged in the US market. Toyota Motor Corp, Nissan Motor Co and Honda Motor Co. registered a rise in sales volume in the North American market during July to September. Investors are closely monitoring the forecasts about vehicle sales to ascertain the possible outcome from the third quarter results. The US and China markets account for one-third of global sales for the top three Japanese automobile companies. The rise in US sales and weaker Yen may add to profits for the Japanese automobile majors during the quarter.

The US is the biggest market for Japanese automobile companies. Japanese global auto majors have been expanding in the US market with encouraging growth rates for the past 15 years. However, there's caution in the air as the China's economy slowdown would impact the performance of the automobile companies.

Car sales have been moving southwards in the Chinese market owing to the slowdown in the economy and declining consumer spending. Top three Japanese automobile majors are recording varied performance in the market. Toyota and Honda are able to sail through turbulent economic conditions while Nissan is suffering from sluggish sales volume.

Earlier analysts predicted that Nissan may record five percent rise in quarterly profits to $1l.1bn (Yen132bn). Honda may witness seven percent growth in profits to Yen129bn and Toyota's net profit may rise 14 percent to Yen614bn.

Nissan profit during the second quarter ending September posted 38 percent rise on encouraging sales in the US, Europe and China. Contrary to expectations, Nissan was able to improve sales in the dragon country as well. Nissan posts a profit of $1.4bn (Yen172.8bn) up from Yen124.9bn in the previous corresponding quarter. Nissan is expecting $4.4bn (Yen535bn) profit for the full year till March 2016.

Market analysts are upbeat on Toyota and Nissan that these two companies may increase full-year forecasts. The increase or decline in a full-year forecast for China and the US markets would give a clear indication about the global automobile market. The US and China markets contribute over one-third of sales volume globally.

The sluggish financial markets in China coupled with the slowdown of the economy are still giving an uncertainty in forecasting outlook for the next quarter. Market analysts are closely watching profitability in China market as automobile majors are set to announce quarterly results.

The surge in the US sales and weaker Yen are expected to boost profits for the third quarter. Toyota is expected to post annual profits for the three years in a row. The latest episode of Volkswagen could impact its sales and in turn benefit Japanese automobile majors.

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